The dependency on third parties in terms of logistics is not less than curse to a brilliant idea of any eCommerce startup in India. Being the founder of Simbacart - Footwear Marketplace , I have been working and had worked with almost all logistic companies catering to North in last 1.5 years.
Importance : Logistics is the backbone of eCommerce startups. All in place but if logistics fails its a Pentadruple failure 1. When you sent the courier originally you bear a cost 2. Return to Origin , many times due to some silly reason - you bear a cost 3.The company is again liable to send the order again to the customer.-you bear a cost 4. The result is frustrated customer - Customer acquisition failed 5. Bad word of mouth - you loose potential customers too.
Good is worse : You found one good logistics partner like I found Delhivery.com , The delivery time is average , yes they listen , the cash on delivery remittance is fastest BUT its not a boon as eCommerce purpose cannot be fulfilled by a single logistics partner. But Why? 1. Every courier partner do not serve all the pin codes of the country 2. What if you get into some clash with the courier partner? You are running a digital campaign and getting 500 orders each day , the conversion will least if you are working with just one. So even if you find a good logistics partner your purpose is not solved if you are an eCommerce.
The Challenges : Just like eCommerce is booming , logistics too. Just like eCommerce is maturing , logistics too. Just like eCommerce needs ample improvements - the continuous improvements - Logistics too. Many companies do not accept the gap when they talk to clients. But its OK!! Logistics companies nowdays are having ample business that they are improving at their own pace whereas their pace need to be 100 percent faster that even the eCommerce. They need major innovations for a better sync.
Even from Top logistics companies , after paying 4 times of the normal logistics cost , the delivery time assurance is not for each parcel , the ease of Return to Origin is prioritized by the logistics partner than the pain of delivering the parcel with a little more effort to the customer. Negotiations are tough in the market. Tracking is poor from all Top to normal logistics companies. May be due to franchise model they are further dependent on third parties but the ultimate suffer is the sender. Its tough to fight with logistic companies as the majority money of the eCommerce due to Cash On Delivery option lies with them. Some cheap companies even forgets the basic accounting while doing business , they just deduct all your bills from your cash lying with them and will send you rest of the payment. You will find 3 out of 5 who will say business will happen as per our conditions - The rates - The cash remittance cycle , they least bother what is client's pain area or they are loosing business too. The sad part is - Enough business with logistics companies due to eCom boom and poor technology with them at present to handle huge volumes, which could ultimately cut their cost.
Does not matter : The above does not matter in one case , if our product value is in thousands i.e I am selling product of above Rs.2000 with more than 50% of the margins or If I am catering to only limited cities as a local brand. And the best is if I have my own logistics company like Flipkart has Ekart , Jabong has Gojawas and there are many more , which is probably not possible for a startup.
The Solution : . 1. "Patience is the key" , we need to wait for the logistics companies to improve.
2. The one more great idea is 3 to 4 startups should integrate their logistics with
each other and should combine themselves while negotiating with logistics partner.
3. We should choose high value products to sell , when we are a startup.
4. We should work locally more or should work in limited zones in the country.
5. We should be the part of a startup logistics chain too for better rates for own business.
I am also working on more solutions , I may be coming up with new article soon.
Mandeep!